Rick Kozen, a hemp entrepreneur, launched Operation: Hemp Aid to help distressed farmers. He is concerned whether inexperienced hemp growers in other states are "walking into a nightmare" if they plant big acreage this year.

Barry Cook, left, speaks with his son, Bo, in a field of hemp growing at his nursery in Boring, Ore. Cook believes the hemp industry is seeing a course correction in production but still faces a bright future.

Rick Kozen, a hemp entrepreneur, launched Operation: Hemp Aid to help distressed farmers. He is concerned whether inexperienced hemp growers in other states are "walking into a nightmare" if they plant big acreage this year.

Barry Cook, left, speaks with his son, Bo, in a field of hemp growing at his nursery in Boring, Ore. Cook believes the hemp industry is seeing a course correction in production but still faces a bright future.

Oregon’s hemp growers are apparently retrenching in 2020 after the crop’s explosive expansion last year left many bitterly disappointed with their financial results.

Roughly 6,300 acres of hemp were registered for planting during the first quarter of 2020, down more than 75% from the 25,400 acres registered during the same period in 2019, according to the Oregon Department of Agriculture.

Though it’s still early in the season — last year, farmers ultimately registered to grow nearly 64,000 acres of hemp — experts say a problematic harvest, glutted market and regulatory morass is forcing growers to drastically scale back their ambitions.

Rick Bush, a hemp farmer and processor in Salem, said he personally uses the cannabidiol, or CBD, extracted from hemp for health reasons and considers it a “wonderful product.”

However, the “brutal” economic situation of plummeting CBD prices and insufficient demand has devastated growers who’d invested heavily in growing the crop last year, he said.

“Hemp is an empty promise,” Bush said.

Many farmers who planted hemp in 2019 were later confronted with inadequate or insufficient harvest machinery, a lack of storage and processing capacity as well as weather problems that degraded the crop’s quality.

“You had just one setback after another,” said Beau Whitney, founder of Whitney Economics, a consulting firm that tracks the hemp industry.

Processors now have more than enough hemp biomass remaining for extraction, as well as a surfeit of finished CBD products they’ve yet to sell, which is depressing prices for the crop, Whitney said.

At the same time, major food and beverage retailers who were expected to infuse their goods with CBD are proving reluctant to jump in with both feet, he said.

“There are a lot of retailers who want in, but they just don’t trust the supply chain right now,” Whitney said. “There are a lot of shysters out there and a lot of failed deals.”

Food manufacturers also lack certainty whether CBD will be regulated as a food supplement or a pharmaceutical, which will determine whether such products will be widely used in the food supply, he said.

Given the U.S. Food and Drug Administration’s focus on the coronavirus outbreak, the answers to such regulatory questions may not be quickly forthcoming, Whitney said. “I don’t see a lot of movement until this whole pandemic stabilizes.”

Under the circumstances, it’s probably a good sign that Oregon farmers are taking a more “measured approach” in their hemp planting expectations, he said.

“What this could be a reaction to is people got over their skis last year,” Whitney said. “It’s encouraging that farmers are starting to do their due diligence and lining things up before planting a bunch of stuff.”

While the troublesome 2019 harvest may eventually turn out to be a bump in the road, the consequences are currently causing real pain for hemp producers contending with a saturated market — especially due to market disruptions from the coronavirus outbreak.

A shipment of 1 million pounds of hemp biomass produced by Oregon farmer Jerry Norton was supposed to be sent to Italy but the buyer has postponed the deal while that country battles the disease.

“I can’t really blame them, to tell the truth,” Norton said. “Everybody is kind of scared to do business deals.”

Norton’s seed company, American Hemp Seed Genetics, also isn’t seeing as much demand as would be expected at this point in spring, when farmers are preparing for planting.

“We’re just not seeing the urgency for the seed,” he said. “If you’re sitting on last year’s product and it’s still quite abundant, you’re not going to be looking at planting 40 to 50 acres.”

In the long run, the hemp industry will persist in Oregon and elsewhere, though it’s unlikely to be more lucrative than any other agricultural commodity, Norton said.

“I think it’s going to be a race to the bottom for efficiency and pricing.”

The question is whether farmers beyond Oregon who aren’t as familiar with the hemp industry’s recent turbulence will control their exuberance, said Rick Kozen, a hemp broker who’s Operation: Hemp Aid helps harvest the crop.

“The problem is now we have other states growing, so that’s going to push the inventory even higher,” he said.

Oregon is one of the pioneers in the U.S. hemp industry, with its commercial production beginning about five years ago under the pilot program provisions of the 2014 Farm Bill.

Under the 2018 Farm Bill, the crop was effectively legalized nationally and it’s expected to be grown across more states due to rules enacted by the USDA last autumn.

“When you talk about other states coming online, they don’t have that raw experience of doing it,” Kozen said. “If they’re walking into growing big acreage, they’re walking into a nightmare.”

The hemp industry is experiencing a “course correction” in production caused by supplies overwhelming the demand growth, said Barry Cook, a hemp seed producer with the Boring Hemp Co. in Boring.